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Taxing Questions For SARS

No one can fault Revenue for the excellence and efficiency of the work it has done in drawing greater numbers of our people into the tax net and of increasing State revenue to such a degree that our macroeconomic fundamentals, insofar as Revenue affects them, have never been better.

It’s safe to say that, as it’s the case that Trevor Manuel is the finest Finance Minister in our history, so it is that Pravan Gordhan is far and away our finest tax collector.That both men come from non- financial backgrounds yet have such clearly superior grasps of their respective portfolios speaks a great deal about their latent talent and ability.And, again, that highlights what apartheid denied the nation over generations: the fruits (of the desires, ambitions and energies of the majority of the population.Oh, what could have been.

But as we can’t alter the past, we must carry on and build a better future.What’s all this, you might ask, got to do with the dreaded lifestyle questionnaire? Well, we now live in a free society where debate and disagreement and criticism are essential elements if we are to preserve that freedom.

Thus we come to the proposed new Protection of Personal Information Bill, which is to be welcomed, unlike certain other proposed legislation, including Constitutional amendments aimed at further centralising State control by giving Government dominion over SA’s courts.

The SA Law Commission states: "The Act is a general information protection statute, which will be supplemented by codes of conduct for the various sectors and will be applicable to both the public and private sectors, it covers both automatic and manual processing and will protect identifiable natural and juristic persons.” par Financial services providers must gather all sorts of information in terms of the various acts, such as Fica and Fais.Once the new Act is in place there will be a severe, and quite costly, onus on such undertakings to protect, store, preserve and handle with the greatest circumspection information that they’ve received from clients.That’s to be welcomed.

But what’s also interesting is that it will be necessary for anyone asking a "data subject” – the legal entity to which the information pertains –par for personal details, to do so only for a "specific, explicitly defined and legitimate purpose” as it’s put in a Business Day report by consultant Burnett Biddulph.

That brings us back to the lifestyle questionnaire.While I’ve never seen one of these notorious documents, several taxpayers of my acquaintance have done so.At considerable cost and inconvenience – and with the assistance of professionals such as accountants and lawyers, who charge like wounded bulls – they completed the questionnaires that demanded, for example, data on four years of expenditure, including, so I’m told, on the wife’s perfume and other cosmetics.There’s no mention, apparently, of mistresses.

Now it’s always seemed to me to be an invasion of privacy, a sort of fishing expedition: and that suspicion increased when I was told that, once returned to Revenue, taxpayers never heard anything back.Further, there was no "specific, explicitly defined and legitimate purpose” contained in Revenue’s demand that the taxpayer complete the questionnaire.Taxpayers have justiciable and constitutional rights and those will be strengthened by the new information Act.

Daniel Erasmus, of Daniel Erasmus TaxConsulting, warned at a recent symposium to "beware of Revenue’s attempt to conduct a fishing expedition”.He offered a 31-point questionnaire aimed at Revenue that a taxpayer might send to Revenue on receipt of its request for "information, documents or things”.

In the event Revenue declines to answer any of the questions then, advises Erasmus: "The taxpayer would respond by quoting section 195 (1) of the Constitution, citing lack of a high standard of professional ethics (requiring collegiality), lack of fairness(keeping the taxpayer in the dark with a lack of reason), lack of impartiality, transparency and accountability and a presence of bias, all of which are inconsistent with the Constitution and thereby leading to Revenue’s conduct being invalid.

"This would be cited as the reason why Revenue cannot invoke the criminal sanctions in section 75 of the Income Tax Act.Rule 53 application would then become the appropriate relief for the taxpayer.” Alternatively, suggests Erasmus, sit down with a Revenue representative and try to sort matters out without resort to court action.But that’s only after sending the taxpayers’ 31-point questionnaire and Revenue not answering it in full.

Included in the 31 points in Erasmus’s taxpayers’ questionnaire aimed at Revenue are:

• State whether the disclosure of the requested information is mandatory or voluntary. If mandatory, why do you (Revenue) say so and what penalties may/will result from non-compliance in furnishing the data you have requested?

• State the principle and specific purpose for which the information requested is to be used in any and all capacities.

• Explain how and why the demand for information sought is not too vague and broad in scope.

• Show or prove that after this initial investigation, the Commissioner or his officials have determined that a further examination is necessary and warranted.

• State exact reasons in detail for the examination of the specific year/s for which information is requested.

• Explain why and what issue in law or fact is being questioned.

• State the name, address and telephone number of any person or persons informing you of any questions or concerns involved in any item or tax return of any activity of the taxpayer.

WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

MINIMUM REQUIREMENTS TO REGISTER

The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.